Category

Outlook 2010

Money Morning Mid-Year Forecast: Why China's Economy Will Exceed Expectations in the Second Half of 2010

By , Contributing Writer, Money Morning - • Print | Email

The rapid growth China's economy experienced in the first half of the year was a blessing and a curse. It helped propel the world out of a disastrous recession, but it forced policymakers into action to prevent overheating – which scared off many investors.

But the fact is that while most of the world was struggling to keep the engine of economic recovery from sputtering to a halt, China spent the first half of 2010 with its foot on the brake. And now that the Red Dragon has reigned in growth, the second half of 2010 will likely look very different from the first.

Money Morning Chief Investment Strategist Keith Fitz-Gerald says nearly everyone felt the first quarter's 11.9% growth in Chinese gross domestic product (GDP) was "too hot." But the 10.3% growth China saw in the second quarter will likely be topped in the second half.

The reasons for that are simple:

"From an investment perspective, the single biggest concern right now is how hard and for how long the Chinese government will keep tapping on the brakes," says Fitz-Gerald. "I personally don't think it's going to be too much longer – an easing sometime in the third quarter now seems realistic."

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How to Profit From a Slowing U.S. Economy In the Second Half of 2010

By , Contributing Writer, Money Morning - • Print | Email

As much as the architects of the U.S. stimulus might otherwise wish, it's becoming increasingly apparent that the U.S. economy won't be hot-rodding its way into a higher gear in the year's second half.

At best, the U.S. economy will chug along in low gear – managing only minimal overall growth, while bouncing over economic speed bumps that exist in more than a few key sectors. At worst, the engine of economic recovery will sputter, or stall completely – leaving Americans stranded alongside the fiscal roadside, or to roll backward into a double-dip recession.

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Money Morning Midyear Forecast: Three Reasons Technology Companies Will Continue to Coast through 2010

By , Associate Editor, Money Morning - • Print | Email

Technology companies had a blowout first half marked by strong earnings and successful product rollouts. But the second half of 2010 could be even bigger, because a flurry of merger and acquisition activity, corporate IT splurges, and high consumer demand – particularly in emerging markets – have set the stage for a serious haul.

"We're going to have much stronger results in the second half [of 2010] than anyone's expecting," Mark Stahlman, a partner at research firm TMT Strategies, told CNBC.

Business was booming back in 2007, but technology companies froze when businesses and consumers were engulfed by the financial crisis. Global tech spending dropped 4.2% in 2009, but is already bouncing back in 2010.

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Money Morning Mid-Year Forecast: India is on the Path to Double-Digit Growth

By , Money Morning - • Print | Email

If it's able to control inflation and cut its debt, India could well become the world's most appealing investment opportunity.

Europe is choking on debt and scrambling to salvage its beleaguered currency. The United States is saddled by high unemployment and struggling to preserve its wobbly recovery. Even China – which has had to reign in its stimulus to cool its red-hot property market and curb inflation – may have peaked.

Yet India's gross domestic product (GDP) is shooting sharply higher, and many economists think economic growth in the subcontinent is about surge into the double-digits for the first time ever.

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Money Morning Midyear Forecast: The U.S. Economy is Headed For a Second-Half Slowdown

By , Contributing Writer, Money Morning - • Print | Email

Most textbook economists say that the U.S. economy is engaged in a broad-based recovery. But while there's a consensus that there's no "double-dip" recession on the horizon, the evidence suggests the nation's economy is headed for a slowdown in the second half of 2010.

The reason: In a market that derives 70% of its growth from consumer spending, the last half of this year will be all about those consumers – and about the economy's inability to generate enough jobs to keep the nation's cash registers ringing.

If you add to that concern the end of the various government stimulus efforts, possible fallout from the Eurozone debt contagion, and oil in the Gulf of Mexico defiling the shores of four states, you end up with an economic outlook that's clouded with uncertainty.

And that uncertainty will continue to stifle hiring and will result in another round of consumer belt-tightening – and a continued economic malaise.

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After a Strong First Half, Is the U.S. Dollar Headed for a Reversal?

By , Contributing Writer, Money Morning - • Print | Email

In spite of an assortment of economic uncertainties at home, the U.S. dollar has been the star of the currency world for most of 2010. Spooked by persistent and seemingly insurmountable debt problems in the European Union – and the specter of unsustainable growth and potential inflation in China – investors fled European and Asian currencies for the perceived relative safe haven of the dollar.

But the U.S. dollar may have topped out.

Let me explain …

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Money Morning Mid-Year Forecast: The Dollar Headed for Some Change 

By , Contributing Writer, Money Morning - • Print | Email

In spite of an assortment of economic uncertainties at home, the U.S. dollar has been the star of the currency world for most of 2010. Spooked by persistent and seemingly insurmountable debt problems east of the Atlantic and the specter of unsustainable growth and potential inflation on the Pacific side of the globe, savers and investors fled European and Asian currencies for the relative safe haven of the dollar.

As Keith Fitz-Gerald, Money Morning's Chief Investment Strategist, pointed out last week (June 10), from January through May, the dollar gained ground against all but two of the world's leading currencies – China's yuan and the Japanese yen – and it retained parity with them. The greenback appreciated by as much as 16% versus the struggling euro, which last week (June 8) briefly dipped to a four-year low below $1.20, and 13% against the British pound.

The InterContinental Exchange's (ICE) U.S. Dollar Index (USDX), which measures the dollar's value versus a trade-weighted basket of six leading foreign currencies, climbed from a low of 76.732 on Jan. 14, 2010, to an intra-day high of 88.586 on June 8.

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Money Morning Mid-Year Forecast: Oil Prices Down but Not Out

By , Contributing Writer, Money Morning - • Print | Email

While it looked like they were headed towards the $90 a barrel level, oil prices hit a wall in the spring. Rattled investors who worried about the direction of the global economy shunned black gold in favor of real gold as a means of preserving capital.

But don't be fooled. The spring retreat simply set the stage for a second-half rally.

After starting the year at about $81 a barrel, prices climbed as high as $86 a barrel before plunging to $64 on May 25.

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How to Make the Most of a Resurgent M&A Market in 2010

By , Contributing Writer, Money Morning - • Print | Email

Unlike this time last year, prospects for U.S. corporate mergers and acquisitions (M&A) appear robust heading into the new year. And that bodes well for investors astute enough to identify the sectors where action will likely be hottest.

As an indication of the improving outlook, nine deals with a total value of $19.9 billion were announced from the start of December through Christmas Eve. That came on top of November's 14 M&A announcements, which were valued at $63.175 billion – although that number was distorted somewhat by Warren Buffett's $26.52 billion bid for the 78% of Burlington Northern Santa Fe Corp. (NYSE: BNI) he didn't already own.
 

By contrast, archives of merger-tracking Web site The Online Investor,  show 15 deals involving publicly traded U.S. stocks in December 2008, but the total value was a meager $3.986 billion. (That's not counting the $8.8 billion merger of Japanese electronics giants Panasonic Corp. (NYSE ADR: PC) and Sanyo Electric Co. (OTC: SANYY), which brightened the global picture somewhat.) November 2008 had 14 deals valued at just $4.898 billion.

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